Sterling steadies near 2-week low ahead of wages numbers

LONDON: Sterling steadied near a two-week low against the dollar on Wednesday, as traders awaited data expected to show British wages picking up speed but still lagging inflation.

The pound got only a temporary lift on Tuesday after numbers showed British consumer price growth unexpectedly rose to its highest level in nearly six years in November, tightening a post-Brexit vote squeeze on households whose spending is the main driver of the country’s economy.

The figures showed annual inflation at 3.1 per cent, well above the Bank of England’s 2 per cent target.

But they were seen as unlikely to affect how soon the Bank will raise interest rates, because of lagging wages and because a key reason for the spike in inflation is the temporary effect from the plunge in the pound since the vote for Brexit.

Sterling was trading flat at $1.3320 at 0840 GMT, close to a two-week low of $1.3303 hit on Tuesday.

Against the euro, it was flat at 88.17 pence.

“I expect that the question of wages is highest in people’s minds right now and that overall, if the figures come in as expected, they would be seen as mildly sterling-supportive – although of course major Brexit news could overwhelm the impact of the data,” said Marshall Gittler, strategist at ACLS Global.